NEW DELHI: Hospitality chain Lemon Tree Hotels has received capital market regulator Sebi's go ahead to float an initial public offering.

The company had filed the draft red herring prospectus (DRHP) with Sebi in September and obtained its "observations" on December 22, which is necessary for any company to launch public offer, latest update with the regulator showed.

Going by the draft papers, Lemon Tree Hotels' public offer comprises sale of up to 195,797,000 equity shares by the existing shareholders, including Maplewood, Whispering Resorts, Palms International and RJ Corp.

The offer will constitute up to 24.90 per cent of the post-offer paid up equity share capital of the company.

The public issue is aimed at achieving the benefits of listing the equity shares on stock exchanges.

"Our company expects that listing of the equity shares will enhance our visibility and brand image and provide liquidity to our shareholders. Listing will also provide a public market for the equity shares in India," the company said in the DRHP.

Kotak Mahindra Capital Company, CLSA India, J P Morgan India and YES Securities will mange the company's public issue. The equity shares are proposed to be listed on the BSE and the National Stock Exchange (NSE).

The company has 40 hotels with 4,300 rooms in 24 cities across the country.

Founded in 2002 by Patu Keswani, the company has hotels under four brands -- Lemon Tree Premier, which is an upscale brand; Lemon Tree Resorts, a leisure segment brand; Lemon Tree Hotels, a midscale brand and the economy brand Red Fox Hotels.